The emergency announcement in Riau province on Sumatra island came as aircraft were deployed to water-bomb the raging blazes and conduct "cloud-seeding", which involves chemically inducing rain.
Smog-belching fires are an annual problem during the dry season in Indonesia. Vast tracts of land are cleared on Sumatra and the Indonesian part of Borneo island, using illegal slash-and-burn methods to make way for palm oil and pulp and paper plantations.
Although there were more fires in other provinces, Riau has been one of the worst-hit as smog blows in from the surrounding areas.
Environment Minister Siti Nurbaya Bakar announced the state of emergency and said that more heath posts would be set up in Riau.
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Arsyad Juliandi Rachman, Riau acting governor, said assistance would now be requested from the central government, state-run news agency Antara reported.
There were concerns about the potential impact on next weekend's Formula One, with organisers saying they were monitoring the haze.
"In the event that the haze caused visibility, public health or operational issues, Singapore GP would work closely with the relevant agencies before making any collective decisions regarding the event," a Singapore GP spokesman said in a statement.
Bakar agreed to share the names of companies suspected of causing the fires with Singapore during a phone conversation with Singapore Environment Minister Vivian Balakrishnan Monday afternoon, authorities in the city-state said.